Notes From Underground: Putting Qatar On Our Screens, A Potential Disruptive Force

Many times I have written that you don’t buy gold/silver on the outbreak of war but merely trade it. Over the last 35 years any GOLD rally on the outbreak of any world conflicts has been a mere short-term trade. Sometimes situations represent potential paradigm shifts which unfold over time. Yesterday’s announcement by Saudi Arabia, Egypt, United Arab Emirates, and Bahrain to sever ties with Qatar may be representative of a significant change in the fabric of Mid-East relations. I stress MAYBE because certain events will have to follow develop signal a seismic shift. THE QUESTION TO CONSIDER: WHY THE SUNNI COALITION CHOSE THIS TIME TO DENOUNCE QATAR?

It was only last week that President Trump and his entourage sword danced with the Saudi hierarchy and the Saudis announced several major arms, business deals and pledges to confront the radical jihadis. What else was discussed that the Saudis felt comfortable enough to disrupt the established order? This is a difficult situation for the U.S as Qatar hosts a large U.S. airbase while the U.S. Fifth Fleet is based in Manama, Bahrain. The U.S. owes allegiance to both states so to what purpose is the House of Saud seeking to pressure U.S.policy? Is Saudi Arabia intent on causing increased tension with Iran in an effort to test U.S. policy and Trump’s challenge to end the threat of terrorists to the U.S. and Mideast political stability?

Tensions are certainly increasing as the Saudi’s and Iranians covertly test each other through the use of PROXY fighting forces in Syria, Iraq and Yemen. Is the Saudi-led action a message to Qatar to end its cozy relationship with Iran, which Saudi Arabia accuses of fomenting and financing Islamic extremism? We will monitor any Iranian response to the Saudi led maneuver. Will Iran step up activity in Yemen? Will Iran’s proxy Hezbollah fire missiles into Israel in an effort to redirect attention away from tension in the Gulf and possible issues with the Straits of Hormuz? If Iran seeks to heighten tensions to a new level what will be the response from the U.S. who has alliances with Qatar and Bahrain?

These are some of the potential tinder boxes that could ignite a conflagration in the energy rich Persian Gulf, which supplies so much of the world’s daily energy needs. Yet, the global equity markets maintained an eerie sense of calm as a new source of uncertainty was piled on tinder pile of fully priced global asset markets. Volatility remains at record lows in a world fraught with financial risks as a result of potential geopolitical uncertainties. It is a massive amount of short option premium that provides the greatest threat to all global asset classes. You don’t need to be a black swan to cause an upheaval in the all-weather risk parity model. Oh yes, the British elections, ECB meeting and French Parliamentary elections are also on the agenda this week.Nothing to see here. KEEP CALM AND CARRY ON.


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11 Responses to “Notes From Underground: Putting Qatar On Our Screens, A Potential Disruptive Force”

  1. Publius Says:

    Four paragraphs of nothing but questions and a Chuchillian statement to keep calm and carry on. Will do!

  2. silverbug2155 Says:

    I feel that Gold will rise along with equities and other private assets when money realizes that Govt,from a global point of view, had lost it’s ability to lead and manage. The US is failing in that department. European Union, a failed experiment from the beginning is imploding. Even the 2008 crisis, Gold rose because of mismanagement. We are watching Western Finance implode. Prepare for the worse.

  3. Golden Instrument Says:

    Here’s an angle to the Qatar story.

    “…The price of natural gas purchased from Qatar in the previous two years is too high. Now, with this opportunity, you should renegotiate with Qatar and re-sign the price, or buy it from Saudi Arabia. Qatar is now very isolated, if you lose the support of the big buyers in China, will be more passive.

    The second is for Saudi Arabia. It is today that the news is that China is dealing with crude oil in Saudi Arabia to pay in renminbi. In this diplomatic conflict, Saudi Arabia also needs more national support. China in this appropriate time, in exchange for a big breakthrough in RMB settlement, it will be very big success.

    China is now the first two major oil importing countries, one is Russia, one is Saudi Arabia. Russia and China’s oil trade, has gradually begun to settle in renminbi, but also because of this, Russia replaced the Saudi market in China’s boss position. Originally, Saudi Arabia was anxious to take advantage of this opportunity to negotiate with Saudi Arabia.

    If China’s two major oil-importing countries trade settlement is to use the renminbi, then it will be a big step for the internationalization of the RMB, but also a major step in China’s economic security and energy security.”

  4. Richard H Papp Says:

    Meanwhile at home Washington is fiddling with an infrastructure bill which could change the playing field for many in the transportation industry. On May 17th the Dow Transports made a reaction low. This low was unconfirmed by the Industrials. Last week the Transports failed to follow the Industrials to new high. In Dow Theory a move by one unconfirmed by the other is often deceptive.
    Always interesting and never dull!

  5. the american limey Says:

    the old airbase concept is going away. Consider the Perdix swarm technology deployed from a sub to recon an environment, Then send the results to Jstars for review. Choice could be made to put the results ( photos of “interesting people”) in social media to make our point. We, of course have the other option to “visit them” as well.

    interestingly swarm technology also has a home in trumper’s air traffic control system revamp. If you can separate drones…

    We can do more with less is my point. The less physical presence we have over there the better.

    • yra harris Says:

      Limey—you should apply for a position in the defense department and save Americans from the python like nature of the military industrial complex

      • the american limey Says:

        thank you but I did that for a time and it doesn’t pay very well, much prefer YraWorld, more fun and profitable.

        strangely Python is my fav computer language right now. Remember my point about how the Perdix swarm tech ( military) ALSO works for planes ergo a new breed of air traffic control?

  6. ShockedToFindGambling Says:

    Yra- good article…..this is the 1st of your posts i have received in several months.

    Treasury/Junk, Treasury/Inflation-linked, Yen/Euro, Energy, and now Gold have turned risk off…….bad things coming.

    I am guessing the yield curve will steepen sharply, when it hits the fan.

  7. Rob Syp Says:

    Regional Banks and the 10-2 yield curve…

  8. Arthur Says:

    The $110 billion arms deal to Saudi Arabia is fake news via Bruce Riedel (Brookings)

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